AI spoils share price of IT companies
Image Credit source: ai generated
The increasing interference of Artificial Intelligence has created an uproar from America to Asian markets. There is a big fear hidden behind the huge fall seen in the Indian stock market on Friday. Will AI replace traditional IT companies? Due to this apprehension, there was massive selling in IT sector shares and investors’ portfolios sank into the red.
Fear of AI in IT companies
The biggest buzz in the market right now is that AI is changing the map of the technological world. There is a fear in the minds of investors that the work which Indian IT companies do with huge teams, at high cost and in more time, is now being done by AI tools in a jiffy and at very low cost. This is the reason why shares of big companies like TCS, Infosys, Tech Mahindra and Wipro witnessed a huge decline of up to 6 percent. America’s Nasdaq index, which is the main index of IT stocks, also fell by more than 2 percent.
Its direct impact was visible on the Indian market. Nifty 50 gave a gap-down opening at the level of 25,571 and in no time touched the low of 25,558. The condition of Sensex was also similar; After opening at 82,902, it fell to 82,846 and within a short time the market fell by more than 800 points. Further decline was seen till the market closed. Sensex fell 1,048.16 points i.e. (-1.25%) and closed at 82,626.76. Nifty fell 336.11 (-1.30%) and closed at 25,471.10.
Apart from AI, the market turned red due to these reasons
Not only AI, but there are some other important reasons behind this decline of the market. Market expert Avinash Gorakshkar says that the share of IT companies in Nifty is about 10 percent, so when IT shares fall, the entire market falls. Apart from this, investors are also nervous about the inflation data (CPI Data) coming in America. Analyst Anuj Gupta believes that the American economy is currently struggling and efforts by Russia, China and Brazil to reduce the dominance of the dollar are also increasing the concern of investors.
Pressure created in the market due to profit recovery
Investors are now booking profits on the enthusiasm and momentum that came in the market after the recent trade deal between India and America. Along with this, a big challenge is emerging regarding exports. Experts say that after this deal, one-third of India’s exports have now become dependent only on America and China. Since there is already a trade war going on between these two superpowers, it will not be easy for India to strike a balance between the two. This geopolitical tension and the weakness of the rupee against the dollar has shaken the confidence of foreign investors, which has further increased the pressure on the market.
